- Tezos price pauses as price action enters the consolidation phase.
- XTZ is capped by the RSI that is too far overbought and needs to cool down.
- Expect a drop back to technical support before price action ticks $1.20 to the upside.
Tezos (XTZ) price is cooling after a violent bullish rally pierced through some quite substantial elements. A glance at the daily performance of XTZ reveals that the rally is a perfect technical rally that will see a small step back in the coming days. That small dip is the perfect moment for bulls to buy into the price action before Tezos price swings back up 27%.
Tezos bulls’ technical play holds 27% gains
Tezos price delivered its first bullish signal to the market last week on January 11 as it pierced through the monthly pivot level at $0.82. Bulls broke the cap to the upside, tested it for support the day after and the price action then took off again in search of the next resistance. That was the 55-day Simple Moving Average (SMA), which again got broken and tested for support with a higher follow-through.
XTZ currently resides at the monthly R1 resistance level, and with the rally mentioned above the Relative Strength Index (RSI) has been trading for a few days now above the oversold threshold. Any upside will be limited and will only see thin buying from new traders and capital. Instead, look for the cooldown with a step back to the monthly R1 support level. The returning pattern of support can provide an entry-level at $0.94 before being pumped higher toward $1.20.
XTZ/USD daily chart
Risk to the downside could come with the small shift in sentiment being seen this morning in the ASIA PAC session with several negative headlines that could stall or break the reopening story in China. Down the line, it comes down to the fact that the Chinese population is growing old, with fewer young people supporting retirees. This could bite into growth and the reopening story of China and, therefore, the world economy, with XTZ seeing trading near $0.90 as a small risk premium of a recession gets priced in again.
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